Advisory work can be risky in various ways. It’s also harder to quantify, and often depends on the relationship with one individual… It’s harder to scale, harder to value and easier to lose.” – Source: Public Accountant
Many accounting firms struggle with the transition to advisory services. Or at least the transition to a hybrid system where advisory and compliance deliver optimum ROI. One of the biggest challenges is limited capacity. That is, only a few senior professionals have the knowledge necessary to provide clients with meaningful advisory insights.
Another challenge is subjectivity. Advisors analyze and interpret information based on their experiences and perspectives. Objectivity might be the aim, but personal perspective is always a factor. The problem is that individual judgment is difficult to quantify and replicate.
Here’s a more detailed look at these challenges and more.
Advisory expertise is concentrated in a small number of professionals
These practices need very specific, hard-to-find skills to grow and expand through advisory services—they need people who can analyze data, provide higher-level business advice based on those insights, and gain the trust of clients in long-term, ongoing, high-touch relationships.” – Source: CPA.com
Advisory work is defined by the depth of analysis and understanding required to develop strategic plans that drive clients’ businesses forward. This doesn’t just rely on analytical skills. It also depends on intuition and business sense that only comes with years of practice. The task lies solely with specific managers or partners, which brings its own set of unique challenges.
- Knowledge transfer across teams can be limited.
- Firms become dependent on a few key individuals for strategic insight.
- Advisory capacity is limited by the time senior professionals can dedicate to the task.
Key person dependence is particularly risky because the person takes all their knowledge and expertise with them when they leave. They leave a gaping hole that takes a long time to fill.
Firms risk inconsistent advisory delivery
Successful verticalization relies on standardizing processes and using best-in-class technology, which reduce repetitive tasks and accelerates service. In the end, all team members can serve clients in the same way.” – Source: CPA.com
The impact of inconsistency is often underestimated, but it can be a stumbling block for accounting firms and their clients. Different advisors from the same firm may interpret the financial information differently, despite shared work experiences and processes. Worse, however, is that advisors don’t necessarily match each other in terms of the level or depth of insight. The quality of insight becomes a problem.
This results in:
- Challenges training junior staff because there aren’t clear frameworks to guide processes.
- Limits to scaling advisory services without standardized documentation, reporting, and analytics.
- Difficulties in formalizing advisory expertise into consistent, reusable methodologies.
That’s a lot of inconsistency, virtually guaranteed to unsettle clients and dent their trust in their accounting firm.
Standardized insight frameworks enable scalability
Instead of reinventing the wheel for every client, firms must standardize their advisory offerings. This includes clearly defining the scope of deliverables, utilizing predefined service packages, and creating repeatable processes or ‘playbooks’ to make advisory services highly scalable.” – Source: CPA.com
Why is standardization so important?
It creates consistency in client engagements, and it creates consistency in services. Standardized analytical frameworks can be embedded into technology stacks or customizable software platforms to ensure reporting structures are repeatable. This saves time when advisors put reports together for clients. It also ensures that certain information isn’t left out when advisors follow their own processes.
What does this mean for accounting firms just getting into advisory services?
- Junior accountants can complete a lot of prep work for advisors because they have templates and structured tools to use.
- Senior advisors are free to focus on interpreting insights without working through raw data.
- Institutional knowledge is built into firms’ systems, reducing dependency on key people.
Standardization facilitates scalability across clients, enhances the quality of advisory services, and ensures reliable recommendations.
Institutional knowledge must be embedded in systems
When institutional knowledge is embedded in systems, information and insights stay within the firm. So, even when individual advisors develop their own insights through experience and personal judgment the information can be captured and shared to provide a wider perspective.
Why is this important?
- Structured workflows enhance knowledge sharing and enable expertise to be leveraged across client engagements.
- Resulting institutional knowledge becomes an asset.
- Training is more effective thanks to standardized analytical processes.
Advisory frameworks are like templates; they ensure data is captured in the correct format, but they don’t limit advisors to the template. They must still apply their unique expertise to their clients’ circumstances.
Scaling advisory requires repeatable methodologies
Scaling advisory is the goal, but it’s only possible with structure.
Here’s why:
- Highly customized advisory services are time-intensive because advisors build analytical frameworks for each client.
- Capacity is tied to individual time and expertise, which is difficult to secure given the time required to deliver bespoke solutions.
- Manual analysis increases the time and effort advisors must invest in the process to provide strategic insights.
Standardization significantly reduces the time and effort typically required for analysis and reporting. The primary benefit is that advisors have more time to interpret rather than assemble data. This enables more in-depth analysis and higher-quality strategic planning.
Scalable advisory depends on systems, not individuals
Limits of individual-driven advisory
Individual-driven advisory services take too long and are too labor-intensive to be sustainable. A few experienced advisors simply don’t have the capacity to deliver properly meaningful reports for every client. Moreover, because advisory services require advanced skills and expertise, capacity is limited to a handful of qualified professionals.
How can accounting firms make scalable advisory services possible?
A good place to start is embedding expertise into firm-wide systems and processes. This ensures that:
- Standardized analytical frameworks improve consistency across all client engagements.
- Technology enables institutional knowledge to be shared and reused within the financial team.
- Analytical frameworks ensure teams can collaborate more effectively using shared methodologies.
It boils down to this: Advisory work becomes scalable when knowledge is institutionalized rather than limited to individuals.